The European Commission's proposal for the next Multiannual Financial Framework (MFF), covering 2028 to 2034, was presented as a historic overhaul. Yet analysts across the continent argue it does not match the bloc's evolving needs. With a headline figure of roughly €1.8 to €2 trillion, the budget is the largest in Union history, but after accounting for repayments on the NextGenerationEU pandemic debt, effective new spending power drops to around 1.15 percent of EU gross national income—barely above the current framework.
This leaves the Union to finance an expanding list of priorities: defence, industrial competitiveness, the climate transition, enlargement, and continued support for Ukraine. Eulàlia Rubio, Senior Research Fellow at the Jacques Delors Institute, told Euronews: "It is not a budget fit for the union we have today. It's a budget that would work very well for a more unified union, with a stronger sense of political unity. We don't have that."
A New Architecture, but at What Cost?
The Commission's centrepiece reform merges cohesion, agriculture, and regional funds into a single National and Regional Partnership Plan for each member state. Proponents argue this simplifies a labyrinthine system. Critics, however, warn it "nationalises" EU funds, granting governments discretion to redirect money away from poorer regions or climate projects, while weakening parliamentary oversight. The European Court of Auditors has flagged "multiple risks to sound financial management," cautioning that reliance on national control systems with known weaknesses could undermine transparency and accountability.
Rubio sees the problem as deeper than where the money goes: "We need to make sure that the projects selected are the best ones, the ones that help most to achieve EU priorities. Change has become the norm. So, we need more flexibility, and we have to change the way of holding policymakers accountable for that flexibility."
The Own-Resources Mirage
To ease pressure on national contributions, the Commission has proposed five new revenue streams: levies on emissions trading, carbon imports, e-waste, tobacco, and large companies. Zsolt Darvas, an economist and Senior Fellow at Bruegel, warns against over-optimism. "Many people believe that such new own resources would generate some new revenues to the EU budget without a burden on national budgets," he says. "I'm afraid this is not correct." Four of the five streams, he argues, would simply reshuffle money already flowing through national treasuries, not create genuinely new fiscal space.
Darvas singles out the corporate levy, based on company turnover, as "the worst of the five proposals" because it would disproportionately burden lower-margin sectors like retail. He sees the Carbon Border Adjustment Mechanism as having the best chance of approval. But political fragility is real: all five proposals require unanimity and national ratification, meaning any single member state can block them.
Three-Way Gridlock
The European Parliament demands roughly €200 billion more, arguing that is the minimum to protect cohesion and agriculture while funding defence and competitiveness without letting debt repayments hollow out the envelope. The "frugal" bloc—Germany, the Netherlands, Austria, Finland, and Sweden—insists the budget is already excessive and rejects both new EU taxes and common borrowing. Security and defence have reshuffled some alliances: Denmark, once firmly frugal, now backs more spending if it goes to defence, and the Baltics have pivoted similarly. "Some things have reshaped the lines," says Rubio, "but the fundamental division is still between net contributors and net beneficiaries."
This standoff echoes the broader tensions explored in our coverage of the EU's €2 trillion budget talks, where defence surges while farmers and regions face cuts.
What a Fit-for-Purpose Budget Would Look Like
Experts broadly agree on the direction: a larger envelope of at least 1.3 to 1.4 percent of GNI; binding climate and cohesion spending floors; genuine EU-level own-resources that reduce dependence on national contributions; and crisis reserves activatable by qualified majority rather than unanimity. Darvas is clear on the underlying principle: "This relatively small amount of money should be used primarily to serve major European projects"—infrastructure, research, competitiveness, climate—not areas where national governments already have ample capacity to act.
Rubio's vision is a budget that is "much bigger, less pre-allocated, with capacity to support long-term investment and more focus on performance." But she also notes an obstacle: "This assumes very clear priorities, strong consensus, and trust in the EU level to translate those priorities into spending. My worry is that we don't have that today."
The Parliament's push for a €200 billion boost, detailed in our report on the budget battle, sets up a clash with member states that could define the Union's capacity to act in a rapidly changing world.
